Designing public policy for the good of the people

Mark Fabian, Research Associate at the Bennett Institute at the University of Cambridge, examines governments influencing well-being through policy.

Mark Fabian

Research Associate

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Mark Fabian

Research Associate

03 Aug 2021

Key Points

Government interest in the well-being of its citizens has been limited or non-existent in the past, so this shift toward government accountability to the people is fortunate; promoting well-being is intrinsically tied to promoting public values.
A tension exists between creating public policy that’s good for people and policy that gives people what they want, because people often don’t necessarily want what’s been proven to be good for them.
Advocating communication and blending welfare and free-market approaches may be key in improving public policy for well-being.

Public policy for the good of the people

Photo by Alexandro Michailidis

What would it mean for a government to promote well-being, for public policy to be aimed at well-being? I think a lot of the enthusiasm for this way of thinking about public policy comes out of the past few decades, the shift in emphasis towards sustainability and towards more equitable ways of organising society. There is a view that in the 20th century in particular, our government was really promoting material interests, not well-being, and that now we need to move towards a situation where well-being is the goal rather than, say, gross domestic product.

Through most of human history it’s questionable to say whether the government was interested in what its subjects wanted. A lot of rulers were interested in their own interests. To this day, in a lot of countries where we have dictatorial governments, the interests that prevail in public policy are mostly the government's interests, mostly the state's interests – not the interests of its citizens.

We are very fortunate in many nations now to have liberal democratic systems that really empower the citizenry and make the government accountable to them. This is worth keeping in mind, because when we think about well-being, well-being is what's good for people, and that's inextricably tied to what they value. The government can only really promote well-being if it promotes what the public values.

Not always wanting what’s good for us

There's a very interesting tension that's emerging in a lot of the scholarship around this issue and a lot of the public policy advocacy on the part of intellectuals, citizens and interested parties around promoting well-being, because often what's being suggested is that the government actually promotes something that citizens don't want, but that might be good for them.

Let me give you a simple example. There's a lot of research showing that commuting is really bad for your well-being, in the sense that people who have longer commutes tend to have lower life satisfaction. They tend to have worse experienced well-being in that they're stressed more of the day. They have higher levels of cortisol and they generally are in a worse mood throughout the day than people who have shorter commutes. Yet, people don't seem to change their behaviour.

Indeed, in a lot of cases, people are still buying big houses out in the suburbs and having one-hour commutes each way in order to get into town. The experts, the scholars who have discovered these statistical irregularities think, well, we need to change public policy; we need to change what the government is doing. So, they lobby town planners, for example, and they say you need to stop zoning in a way that encourages people to buy big houses and commute into the office. The problem with this sort of approach is that if the public still values big houses and big cars and driving, then the public's well-being in the public's own mind is about having access to those big houses, those big cars and driving to work. If you suddenly make it impossible for them to have those things, you're just undermining their well-being.

Communication is key

What you need to do is to communicate with them that this is not good for their life satisfaction, their stress levels and the rest of it, and try to get them to change their values. Because we live in liberal democratic societies, public policy will respond to these cultural shifts. When we instead focus exclusively or overwhelmingly on lobbying government as experts rather than communicating with citizens, we run the risk of technocracy, of kind of rule by experts – and there are times where technocracy is reasonable, like central banks tend to be very technocratic institutions, and I, for one, think that that's quite okay. However, in the case of well-being, you're talking about a very value-laden term. Well-being is not purely scientific. It's not something that an expert can say: “I know what's good for you better than you do”. That's a very dicey thing to say, because you know what's good for you, or at least you define it, right? There's a value judgement involved in making that sort of claim; a scientist can't make that value judgement on your behalf. So, when we talk about moving from a focus on material concerns to a focus on well-being, that seems very sensible from a sustainability point of view and inequality point of view, a psychological health point of view; but we need to make sure that that shift is driven by citizens first and foremost, and not just by experts lobbying the government.

The welfare state and the free market approach

There's a question of whether the welfare state, particularly the kind of post-war welfare states – post-World War II or contemporary welfare states in the early 21st century – whether these modes of organising government and economy are promoting well-being, or whether we should perhaps move towards a more market-oriented approach, sometimes called a neoliberal approach, that involves really paring back on the welfare state, paring back on the government, and whether this will promote well-being.

On both sides of this debate, you have a similar kind of claim, which is that what's good for people's well-being is autonomy and to be able to pursue the life that is best suited for them. The welfare state side of this argument is usually made in the following way: people can only pursue a life that is good for them if they have basic needs met and basic opportunity, particularly for people who don't do so well in the genetic lottery or the lottery of birth. It's really important that the state, or the community manifest in the state, provides a basic level of access to the economy, to the political process and to society: in particular, things like public health provision, public education provision, the provision of public transport and basic income. That means that you're not so stressed about making sure that you can eat and pay rent that you don't think about making longer-term investments, for example, that will help you live a good life.

Photo by JL Jahn

On the more free-market side, you have the view that the state is in many ways a sort of oppressive force, and that public education, for example, can be quite detrimental to people's well-being, if everyone is getting the same education and we can't choose something a bit more selective that suits our particular preferences.

For example, in the US, a lot of people argue that it would be better to have a voucher system where instead of the government having public schools that you can attend, the government instead gives you the value or the cost of that education to the government in the form of a voucher, and you can then take this voucher to whatever school you want. This would allow you to, for example, pay for a particular religious education that you might think is what's best for you or your child.

A blended approach

On both sides, you have similar arguments. My preference is actually to think about this less in terms of which one of these promotes well-being and more in terms of how we can integrate these two ideas, these two perspectives. A lot of contemporary thinking in our economic circles, at least around what is the optimal way to design a lot of these policies, really supports this view that the best way to think about policy design is not whether state provision is good in and of itself, or that market provision is good in and of itself, but rather that the state, the market and community, as a third domain of public policy, each have various comparative advantages.

If we can blend these different comparative advantages into what we might call hybrid policies, then we can promote equity efficiency and all these different well-being goals simultaneously.

One of the best hybrid policies that I've come across is the Danish system of flexicurity. This is the Danish approach to unemployment insurance, essentially, but it goes far beyond unemployment insurance, because it's an approach to industrial policy, more generally, and the relationship between workers and bosses. In Denmark, if you get laid off, you have income insurance, and it's quite generous initially. Over time it becomes less generous. The idea here is that if you have a very free market, which Denmark does, then a lot of people are going to be changing jobs quite often; both because firms will become obsolete and close and other firms will open, and because there's stiff competition between those firms to attract talent. So, they are going to be constantly poaching workers from different places. In that sort of situation, it’s very efficient. Markets tend to be very efficient, but they're not very equitable, and there's a lot of costs here that individual citizens bear – in particular, risk. A lot of the risk that is inherent in that economy is borne not by the state, as it was in traditional welfare states, but instead by the individual.

How hybrid policies work

Photo by 1000 Words

We want to buffer people against that heavy risk and those big changes in their life, so if you are made unemployed, you can get this unemployment insurance that's quite generous – so you can keep paying your mortgage, for example, for a brief period. After that, it falls down to where you can just make your basic needs, and you can still look for a job. In that case, there's a Protestant work ethic that culturally means that people don't feel good about being unemployed. There are also systems in place that encourage people to get back into work: this system called workfare, where if you are receiving long-term unemployment insurance, then you also need to demonstrate that you're looking for work; or, crucially in the Danish case, learnfare, which is that you are currently educating yourself.

If we focus on this workfare approach, which is a kind of neoliberal style of doing welfare states – that we should have a very small government, we should encourage people to take care of themselves – then the problem is that for people who are becoming long-term unemployed, their skills are becoming obsolete. We need to re-educate those people so they can get work and sustain that job. That way, because they're educated and have more skills, their wage will actually rise and they'll be less of a burden on the state in the long run. So, that's the kind of approach that I think blends both this view that we need to give people basic support and this kind of more free-market view that we need to get the government out of making decisions for people.

There's a further element of flexicurity on this front that I think is really powerful, which is that the government acts as a coordinator between actors in the market. The unions, the employers’ associations and the education providers are all gotten together by the government on a regular basis to discuss what skills the economy needs, what a fair wage is to compensate those skills, and what the costs of providing those skills in an education format are. Through this coordination, you actually improve the efficiency of the economy itself. We again have a situation here where there's a compatibility or a blending between the state and the market that facilitates the satisfaction of people's basic needs and their ability to pursue whatever it is that brings them the most well-being. And I think this kind of approach, what I would call a 21st century welfare state or hybrid policies, is really the future. We need to update the way we think about whether it should be a government approach or a market approach when we think about public policy for well-being.